3 Mile Island Firm Seeks Electricity Discount

By Jerry KnightBy Jerry KnightMarch 28, 1980

In a plan to spread around the cost of nuclear power plant failures, the owners of the Three Mile Island reactor are asking federal authorities to make other utilities sell them electricity at discount prices.

If the Federal Energy Regulatory Commission accepts the request, it could establish a national pattern for requiring other utilities to bail out power companies whose nuclear plants are shut down.

Since the Three Mile Island accident more than a year ago, that plant has been unable to produce electricity. Its owner, General Public Utilities Corp., has been forced to buy millions of kilowatts of electricity from other companies.

The issue before FERC is whether General Public Utilities should pay the usual wholesale prices for power or should get a special break because of the atomic accident.

If GPU does get a break, the discount will come out of the pockets of the customers of companies supplying GPU, including Potomac Electric Power, Baltimore Gas & Electric and other companies in Pennsylvania and New Jersey.

Pepco customers stand to lose an estimated $4 million this year if the GPU discount is granted.

"We intend to oppose it. It's not in the best interest of our customers," said Pepco spokesman David Boyce.

The Three Mile discount would cost Pepco customers money because of the way wholesale electricity rates are figured.Utilities routinely buy and sell power from each other to balance demand for electricity with production at any given time. The power sales are handled through the Pennsylvania-New Jersey-Maryland Power Pool, known as the PJM Pool.

Under federal rules on power pool sales, any profits an electric company makes on sales to the pool must be passed on to the customers. Electric customers pay for Pepco's power plants through their bills, and the company is not supposed to make extra profits from the generators its customers paid for.

Boyce said Pepco has sold several million dollars worth of additional electricity through the pool since the Three Mile Island accident. The profits from these sales are already flowing to Pepco's customers in the District of Columbia and Maryland in the form of slightly smaller electric bills.

But at the same time, GPU's customers are paying bigger bills, because their utility passes on to them the high cost of the power it buys from Pepco.

Should GPU's customers be penalized because their power company had a nuclear accident? Should Pepco's customers profit because of GPU's accident? Or should wholesale-power pricing policies be changed to spread around the burden of of nuclear power plant failures?

The answer to these questions in the Three Mile Island case could set a pattern for future nuclear power plant accidents, FERC officials say.

General Public Utilities took the dispute to FERC last week after failing to get answers from state regulators in Maryland, Pennsylvania, New Jersey and the District.

The states were asked several months ago to approve the discount for GPU, but so far none of them has ruled on the request. State officials apparently are reluctant to tackle the controversy.

Pepco at first supported the request before the District of Columbia Public Service Commission but now intends to ask the PSC to drop the matter, Boyce said. He said Pepco has changed its mind because GPU has changed the deal it is seeking.

Under the original request, GPU offered some concessions to Pepco in return for lower prices. GPU said it would pay for its power weekly instead of monthly. Boyce said that would protect Pepco's customers by reducing their risk if GPU were to go bankrupt and find itself unable to pay.

The original request also would have required GPU to give up its vote on the PJM Pool governing committee if it failed to pay for electricity. Neither of those provisions is included in GPU's application to the Federal Energy Regulatory Commission.

In the FERC application filed March 21 and made public this week, GPU asked to pay only the cost of producing the power it buys from Pepco, Baltimore Gas and the others.

Power pool prices are calculated on what is known as a "split-the-savings" basis. The buyer figures out how much it would cost to generate the power with its own least efficient plant; the seller figures out how much it costs to produce the power, and the two split the difference.